By Jessica Bahia Melo
Investing.com – Energy consumption for cryptocurrency mining is the target of criticism regarding the sustainability of this process. Countries are putting in place new initiatives and regulations to limit overconsumption. In Argentina, for example, some of the largest mining companies have seen their energy bills increase by 400%.The New York State Senate, in the United States, has passed a bill suspending the mining operations of cryptocurrencies that use carbon-based energy.
The negative impact of cryptocurrencies on the environment is exaggerated, due to the importance given to bitcoin. This is what Julius Baer said in a statement Thursday morning, pointing out that other consensus mechanisms, such as proof of stake, "consume much less energy and are much more in the line of sight of developers of decentralized applications (dApps) because of their greater scalability.We see them as the main beneficiaries of decentralized finance (DeFi)," says Sipho Arntzen, research analyst at Next Generation.
While critics point out that high energy consumption is an inefficient use of resources, mining companies believe that safety and decentralization features justify this change. Now, even if the project in NY goes through final approval, "it shows how the environmental footprint of digital assets remains in the spotlight of regulators and investors," the analyst said.
According to Julius Baer, the United States holds the largest share of bitcoin's global hash rate – showing that the largest number of miners are in the country. Therefore, regulatory measures taken in one state may have broader effects and set a precedent for other prohibitions.
"Due to the decentralized nature of blockchain technology, cryptocurrency mining can take place anywhere, with the main factor in deciding the location being the prevailing regulatory environment and electricity costs as one of the main entry costs. This bill could cause several cryptocurrency miners to massively leave the state for more cryptocurrency-friendly states or countries, which could discourage the use of blockchain technology in the state," he detailed.